LECTURE 10

Monitoring and Controlling Project

Introduction

Control is the process of:

comparing actual performance to the plan

to determine the variances,

evaluate possible alternatives, and

take appropriate action.

The ability to control a project is directly tied to the effectiveness of the project plan.

Problems will always occur but they should be kept to a minimum.

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Good Cost And Control System

PLANNINGWORK

AUTHORIZATIONAND RELEASE

DATACOLLECTION

AND REPORTING

COSTACCOUNTING

CUSTOMER ANDMANAGEMENT

REPORTING

PHASE I PHASE II PHASE III PHASE IV PHASE V

OPERATING CYCLECYCLE

PLANNING

Cost estimating Cost accounting Project cash flow Company cash flow Direct labor costing Overhead rate costing Others, such as incentives, penalties, and profit-sharing

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Explanation of Project Costs

Project Indirect Costs

Costs that cannot be associated with any particular work package or project activity.

Supervision, administration, consultants, and interest

Costs that vary (increase) with time.

Reducing project time directly reduces indirect costs.

Direct Costs

Normal costs that can be assigned directly to a specific work package or project activity.

Labor, materials, equipment, and subcontractors

Crashing activities increases direct costs.

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Principles of Monitoring and Control

Set up a formal process to control changes in the project.

Dont micro-manage.

Elevate problems to the lowest level of management that can make the decision and take action.

Be consistent, calculating and reporting schedule progress, cost expenditures, and scope performance throughout the project life.

If you have more than one project, be sure to handle significant, highly-visible projects first and more often, followed by average and then low priority projects.

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Establishing a Plan to Monitorand Control the Project

Determining Information Needs

Determining Data Collection Methods

Determining Frequency of Data Collection

Status Information

Variances

Reports

Course of Action

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Determine Data Collection Methods

Electronic

Manual

Onsite Inspection

One-on-one Interviews

Team Meetings

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Determine Frequency of Data Collection

The reporting requirements of the customers

Average duration of the project activities.

Experience (known or unknown subject matter).

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Variances

Impact on the project.

Whether impact is a problem.

Cause of variance, including reasons and people involved.

Whether the cause of the variance will create variances elsewhere in the project.

The management cost and control system (MCCS)

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Reports

What the plan says should be happening.

What is ACTUALLY happening (status).

Variance between plan and status.

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Cost data collection and reporting flow chart

Actuals

Labor

ACWP

InventoryAccounts

BCWP

Computer

BCWS

Monthly TotalProgram Effort

Weekly LaborReports

MCCS Comparisonreports To All Mngt

Variance Report

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Course of Action

Implement the decision.

Follow up to ensure that the action solves the problem.

Take additional action if necessary to solve the problem.

Document the decisions that make significant changes in the approved plans.

Take preventative action to ensure that similar problems dont happen again.

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Variance Analyses

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Variables for Variance Analysis

Budgeted Cost For Worked Scheduled (BCWS)

The budgeted amount of cost for word scheduled to be accomplished plus the amount of level of effort or apportioned effort scheduled to be accomplished in a given time period.

Budgeted Cost For Work Performed (BCWP)

The budgeted amount of cost for completed word, plus budgeted for level of effort or apportioned effort activity completed within a given time period. This is sometimes referred to as an earned value.

Actual Cost For Work Performed (ACWP)

The amount reported as actually expended in completing the work accomplished within a given time period.

Cost Variance = BCWP ACWP

Schedule/Performance Variance = BCWP - BCWS14

Methods of Variances Analysis

The cost variance (CV) compares deviations only from the budget and does not provide a measure of comparison between work scheduled and work accomplished.

The scheduling variance (SV) provides a comparison between planned and actual performance but does not include costs.

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Cost Variance Calculation

A NEGATIVE VARIANCE INDICATES A COST OVERRUN

CV = BCWP - ACWP

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Schedule Variance Calculation

SV = BCWP - BCWS

A NEGATIVE VARIANCE INDICATESA BEHIND SCHEDULE CONDITION

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Variance Percents

SCHEDULE VARIANCE % =(SVP)

COST VARIANCE % =(CVP)

SVBCWS X 100

CVBCWP X 100

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Classroom Activity 10a

Consider a potential problem that could occur in your current project.

What recommendation would you make to solve it and to whom would you make it?

What alternatives would you suggest if they dont accept your recommendation?

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Questions?